The chief executive of the SoftBank Group of Japan denounced the killing of a prominent dissident in a Saudi consulate in Turkey — but said he would not cut ties with the Saudi Arabian government.
The remarks by the SoftBank chief, Masayoshi Son, on Monday were his first public comments on the disappearance of Jamal Khashoggi, a Saudi journalist who entered the kingdom’s consulate in Istanbul on Oct. 2 and never emerged. Turkey has said Khashoggi was beaten and tortured before being beheaded and dismembered.
But Son’s comments also highlight a basic fact: Despite the outrage directed at Saudi Arabia over the killing, big companies are unwilling to cut off the kingdom as a lucrative client.
More than a dozen business leaders — from Son to Jamie Dimon of JPMorgan Chase to Dara Khosrowshahi of Uber — canceled plans to attend a major Saudi business conference this past month, in what was meant as a rebuke to the Saudi government. (Dimon later said that while his firm “couldn’t be seen in any way condoning” any Saudi officials’ involvement in Khashoggi’s death, he acknowledged that pulling out of the gathering accomplished “nothing.”)
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Few companies seriously contemplated severing their contracts with Saudi clients, however. At The New York Times’ DealBook conference last week, Laurence Fink, of the investment management giant BlackRock, said that it was a “hard decision” to withdraw from the Saudi conference. But he unapologetically defended keeping the Saudi government as a client, saying that doing business there was “not something I’m ashamed of.”
At issue are the billions of dollars that Saudi Arabia has spread around the corporate world. The country has pledged to buy nearly $110 billion worth of arms from the United States, though so far it has spent only a fraction of that. Business from Saudi Arabia constitutes at least 15 percent of the revenue of BAE Systems, the British defense contractor. And consulting firms have courted the Saudi government for years, earning hundreds of millions in fees — to the point that the country’s planning ministry has been nicknamed the “Ministry of McKinsey.”
For SoftBank in particular, Saudi Arabia is a crucial part of its future.
The company, a Japanese internet, energy and financial conglomerate, has increasingly staked its future on its nearly $100 billion Vision Fund. The biggest technology investment firm in the world, the Vision Fund owns stakes in Uber, the co-working space provider WeWork and more.
The success of the Vision Fund has bolstered its parent’s earnings. SoftBank on Monday reported a second-quarter profit of 526.4 billion yen, or $4.6 billion, up fivefold from the same time a year ago, thanks to the Vision Fund’s sale of its stake in the Indian e-commerce company Flipkart to Walmart.
Son said Monday that he predicted the Vision Fund will propel even more growth at SoftBank.
“Next year, we will far exceed the scale we are seeing this year and maybe a scale that Japanese economy has never experienced before,” he told analysts.
But none of the Vision Fund’s success would have been possible without the Saudis, who pledged $45 billion toward the fund. The country’s crown prince, Mohammed bin Salman, who led the investment in the Vision Fund — and who is suspected of being involved in Khashoggi’s death — told Bloomberg News this past month that, without his country, “there will be no SoftBank Vision Fund.”
Indeed, Son hopes to raise another Vision Fund, and it would be unclear whether that is possible without the Saudis’ backing.
Son said Monday that he had raised his concerns about Khashoggi’s killing with Crown Prince Mohammed and other senior Saudi officials, asking for “further clarity on this tragic case.”
“They said they are taking this very seriously,” Son said.
But he made it clear that he would not abandon his business interests in Saudi Arabia.
“We want to see those responsible held accountable,” Son said during a news conference at his company’s earnings presentation in Tokyo. “At the same time, we have also accepted responsibility to the people of Saudi Arabia, an obligation we take quite seriously to help them manage their financial resources and diversify their economy.”
“As horrible as this event was, we cannot turn our backs on the Saudi people, as we work to help them in their continued efforts to reform and modernize their society,” he said.
Son said companies have not refused to accept money from his fund because of Khashoggi’s killing.
He said “there are complicated issues” in the relationships between the United States and Saudi Arabia as well as between Japan and Saudi Arabia.
He added that “as a businessman, I believe I should not be involved in the political side of such a case.”